Field of the Invention
The invention relates to a determination of pricing for items in an online auction system.
Description of the Related Art
Online auctions are becoming a commonplace approach for buying and/or selling goods and services. Auctions utilize a free-market approach to assess the actual market value of the goods and services, by introducing competition and allowing the marketplace to set the pricing according to demand.
Online auctions can be organized in many different formats. Two distinct approaches are the “forward auction” and “reverse auction” configurations. In a forward auction, a seller creates an auction listing for one or more goods or services, and the bidders are buyers looking to purchase the auction item(s) in the listing. Customarily, the seller will set a low initial price, and each successive bidder will submit a successively higher bid until the auction ends. The highest bidder at the end of the auction is the winner and receives the auction item(s) in exchange for payment of the bid amount.
In a reverse auction, it is a buyer, not a seller, who creates an auction listing. The buyer is seeking a particular good or service (or multiple goods or services) and creates the auction listing with a request for such items, seeking sellers to accommodate the request. The bidders in a reverse auction are potential sellers looking to accommodate the items for a price. The buyer will set a high initial price, and each successive bidder will submit a successively lower bid until the auction ends. The lowest bidder at the end of the auction is typically the winner and receives the bid amount in exchange for providing the requested item(s) to the buyer. It is noted that some auctions may incorporate award criteria besides simply pricing. For instance, in a reverse auction, a buyer may utilize award criteria other than price, such that the lowest bidder may not necessarily be the winner as selected by the buyer.
Some auction transactions may involve more than a single item. For instance, a transaction may involve a set of items, with multiple quantities of a particular item and even multiple different item types. As an example, an auction transaction for computer equipment may involve a batch of desktop units, laptop units, monitors, and printers. An auction format may solicit bids for this transaction based on the pricing value for the entire batch, and not for a particular item within the batch.
This situation may apply to both forward auctions and reverse auctions. In the case of a forward auction, a seller of the collection creates an auction listing with an initial selling bid price, and potential purchasers would bid on the collection, driving up the bid price while the listing remains active. In a reverse auction, a purchaser would create an auction listing with a collection of desired purchase items and an initial desired price, and potential sellers would bid to satisfy the desired collection of purchase items, driving the bid price down while the listing remains active.
Despite the bid pricing being based on the entire collection, a party may retain interest in the pricing of individual items within the collection. For instance, the bidding party may be interested in individual-item pricing for specific record-keeping and financial data, for reviewing the price of such items in previous auctions, to arrange for sub-contractors to fulfill items, or for any other purpose. However, the batch nature of the auction transaction hinders the breakdown of individual items.
For example, in a reverse auction, a bidder (i.e., seller) may formulate a bidding strategy based on a set floor price for each item (commonly known as a “limit” price or “floor” price). However, when submitting a bid for the collection that is above an aggregate floor price for the whole collection, the auction may rank competing bids according to an aggregated amount, or may only accept entry of a total bid amount. Thus, there exists a price gap between the collection floor price and the bid amount. In order to define individual-item pricing from the collection bid amount, this price gap must be split among the items in the collection, with each price gap portion for an item being added to the item's floor price to arrive at the item's individual price.
The determination of individual-item pricing becomes even more difficult when bids are submitted on behalf of a bidder using an automatic re-bid feature. With such a feature, a bidder may enter criteria in which automatic re-bids may be submitted on his behalf. For instance, in a forward auction, a bidder may enter an initial bid price and a “rebid maximum” (i.e., ceiling) price for purchasing a collection. The rebid maximum price is the highest price that the bidder is willing to pay for purchasing the auction, and an automatic re-bid feature will automatically submit re-bids as necessary, so long as the re-bids are lower than or equal to the rebid maximum price. In a reverse auction, a bidder may enter an initial bid price and a “rebid minimum” (i.e., floor) price for accommodating a request for a collection. The rebid minimum price is the lowest price that the bidder is willing to accept for providing the items in the collection, and an automatic re-bid feature will automatically submit re-bids as necessary, so long as the re-bids are above or equal to the floor price.
Certain properties may be strongly preferred or even mandatory when formulating a strategy for closing a price gap. These properties may include:                (1) fairness to the buyer and the seller,        (2) transparency,        (3) an accurate total price (the total order price must equal a compete price for all possible price inputs),        (4) a feasible price for all price inputs (below or at an initial bid price, and above a floor price), and        (5) data security (difficulty or inability in reverse-engineering the pricing information).        
There may be other properties that are desirable, to maximize ease of use, clarity results, and in turn, customer satisfaction. These other properties may include:                (6) indifference to the bundling and indifference to placement on an order list (the final sales prices should be unchanged if several items with the same prices are combined on the same line; also, the prices should be unchanged if two items are swapped),        (7) invariance of price (items with identical unit prices and floor prices should have virtually identical final prices; in particular, the final price for identical items should be identical as possible; for example, the final price for black telephones vs. white telephones should be as identical as possible),        (8) conservation of price ordering (if the unit price and the floor price agree that one item is more costly than another item, then the final sales price should conserve that order), and        (9) minimum computational cost (the strategy should be simple to perform and should execute as fast as possible).        
Accordingly, there is a need in the art to process a bid in an auction for a collection of items, and determine individual item pricing for items in the collection. There is also a need in the art to close a price gap between a limit price and a bid-competing price for a collection of items, to determine individual item pricing for items in the collection.